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CIMA
CIMA Operational
F1
Financial Reporting Questions and Answers

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Viewing questions 41-50 out of questions

Questions # 41:

The following information relates to AA.

Extract of Trial Balance at 31 December 20X4;

Question # 41

Notes

(i) Inventory at 31 December 20X4 was valued at cost at $30.

(ii) The loan which was received on 1 July 20X4 is repayable in 20X9.

(iii) Corporate income tax represents an over-provision of tax for the year ended 31 December 20X3. AA reported a loss for tax purposes for the year ended 31 December 20X4 and a tax refund is expected amounting to $20.

(iv) Cost of sales, administration and distribution costs need to be adjusted for the following:

What figures should be entered on the face of the Statement of profit or Loss for the year ended 31 December 20X4 in relation to Interest and Corporate income tax?

Options:

Interest $25 Corporate income tax $(37)

Interest $25 Corporate income tax $37

Interest $50 Corporate income tax $(3)

Interest $50 Corporate income tax $3

Answer

Questions # 42:

The legislation in Country S provides for an indexation allowance in the calculation of capital tax. STU operates in Country S where the indexation factor for the period 1 January 20X1 to 31 December 20X6 is 20%

STU purchased a building for $64,000 on 1 January 20X1, incurring legal fees of $4,000. STU sold the building for $86,000 on 31 December 20X6 before selling fees of $3,500

What is the chargeable capital gam arising on STU's disposal of the building?

Options:

S11,600

$5,700

S900

$200

Answer

Questions # 43:

The following information has been extracted from GHI's statement of financial position:

Question # 43

Which of the following is the total cash flow for working capital changes to be recorded in GHI's statement of cash flows for the year ended 31 December 20X5?

Options:

Outflow of $240,000

Inflow of 5120,000

Inflow of $240,000

Outflow of $120,000

Answer

Questions # 44:

EF is a large manufacturing entity with several of its manufacturing sites in different locations. Currently all of the sites have a local procurement department. EF's board are looking to implement a centralized purchasing system.

Match the tokens according to whether you believe each statement is either an advantage or disadvantage of implementing a centralized purchasing system for EF.

Question # 44

Options:

Answer

Answer:

Questions # 45:

UV's financial statements for the year ended 31 March 20X8 were approved for publication on 30 June 20X8.

In accordance with IAS 10 Events After the Reporting Period, which of the following material events would have been classified as a non-adjusting event in these financial statements?

Options:

On 1 June 20X8 UV's auditors discovered that an error in valuation had caused the closing inventory to be overvalued by $150,000.

On 10 April 20X8 UV received a communication stating that one of its customers had ceased trading and gone into liquidation. The balance outstanding at 31 March 20X8 was unlikely to be paid.

On 1 June 20X8 UV was awarded damages of $70,000 in respect of a legal claim that it had made against the local government authority in October 20X7.

On 28 April 20X8 a fire destroyed half of UV's main production facility. Output was severely reduced for six months.

Answer

Questions # 46:

Which of the following is an example of a progressive tax?

Options:

Personal income tax of 10% on earnings up to $10,000, then at 15% over $10,001

Corporate income tax of 20% on earnings up to $100,000, then at 10% over $100,000

Corporate income tax of 20% on all earnings

Personal income tax of 10% and corporate income tax of 20%

Answer

Questions # 47:

What does the deduction method of giving double taxation relief mean?

Options:

Tax relief is gained by adding the foreign tax from the foreign income so that the gross amount will be subject to tax in the country of residency.

Tax paid in one country may be allowed as a tax deduction another country. Relief is normally restricted to the lower of the foreign or country of residency tax.

Tax relief is gained by deducting the foreign tax from the foreign income so that only the "net" amount will be subject to tax in the country of residency.

Tax paid in one country may be allowed as a tax credit in another country. Relief is normally restricted to the higher of the foreign or country of residency tax.

Answer

Questions # 48:

Which of the following would NOT be a source of taxation rules for a country?

Options:

Double tax treaties

Directives from international bodies

International accounting standards

Precedents based on previous legislation

Answer

Questions # 49:

On 1 May 20X8 DEF enters into a contract to lease plant with a fair value of $200,000. Annual lease payments of $50,000 are to be paid in advance and DEF incurred direct costs to arrange the lease of S2.000 The present value of future lease payments at 1 May 20X8 is $190,000.

What is the amount to be recognised as a right-of-use asset on 1 May 20X8?

Options:

$192 000

$200,000

$240,000

$242000

Answer

Questions # 50:

QR purchased a property for its investment potential on 1 January 20X3 for $2.5 million.

The total property cost is split as follows: land $1 million and buildings $1.5 million. The buildings were expected to have a remaining useful life of 40 years.

The local property index at 31 December 20X3 indicates that the fair value of the property has risen by 10%.

What is the balance that QR will include in its statement of financial position at 31 December 20X3 for this property, assuming that it uses the IAS 40 Investment Properties fair value model?

Give your answer in $million to two decimal places.